Friday, October 26, 2012

Rajat Gupta's remorseless regrets

Rajat Gupta who studied in IIT,Delhi and Harvard University and who headed McKinsey and was a Director in companies including P & G and Goldman Sachs has been sentenced to two years in jail and "impoverished" by $5 million fine. The punishment is much lighter than what the American law allows. The judge, Rakoff admitted to "wrestling with the 63-year old's extraordinary attributes and his disgusting conduct before handing down the sentence".

Gupta pleaded that he may be permitted to render social service in Rwanda and New York ghettos instead of being sent to the slammer. Many dignitaries including Bill Gates and Kofi Annan sought leniency from the judge in view of Gupta's unassailable contribution to society. Rakoff could not accept this argument fully because "while no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society's deep-seated need to see justice triumphant". The judge also rubbished the "Mother Theresa argument" (Gupta's social service merited his immunity from harsh punishment) and clarified, "It is unquestionable that Mr.Gupta is a good man. But the history of this country and the world is full of examples of good men who do bad things!"

Gupta's statement made in the court just before the sentencing was noteworthy for absence of 'mea culpa'. Gupta concluded his well-drafted statement saying, "As I come before you to be sentenced , the overwhelming feelings in my heart are acceptance of what has happened, of gratitude to my family, and friends, and of seeking forgiveness from them all. It is with these feelings that I hope to move forward and dedicate myself to the service of others." He did not seek forgiveness from those shareholders who lost money unjustly because of his indulgence / complicity in insider trading. Gupta continues to maintain his innocence.

Rakoff described Gupta's passing of insider information to Raj Rajaratnam as "disgusting in its implications" and a "terrible breach of trust". When Gupta's guilt is proved to the satisfaction of the jury and the judge and he refuses to own his culpability, fairness demands strict sentencing and not lenience. There is no place for inconsistency in delivery of justice. Judiciary is not a banana republic where the rich and the powerful and those with influential friends will be treated with velvet gloves.

Among the many reactions from Indian business people, Adi Godrej's was pejoratively notable. "I do not want to comment on individual case. However, Istrongly feel that norms against insider trading in India are quite robust". What a revelation!